1099B Equals Messy Tax Season Ahead
The brand new 1099-B form will now include particulars on cost basis, holding period, whether a lot is actually covered or not, acquisition date and disallowed losses from your wash sale.
Under the legislation, the default method for brokers to calculate cost basis is first-in, first-out. Clients or their Palmetto Bay Accounting Service can designate another method (last-in, first-out, cheapest price to highest, etc.) either as a default or for certain lots, but once a trade settles, the method can not be changed. That method lock-in will also have implications for precisely how advisors engineer tax-sensitive investment strategies.
The result of the new forms, CPA Viera predicts, will be widespread confusion among investors, who should be expected to turn to their own Miami Accounting Services in droves on an explanation.
The CPA will likely be nine times out of 10 the main point of contact, Viera claimed. Even if it's not the CPA's issue, they're about to turn to their CPA first.
At our Miami Accounting Service is going to send out around tax newsletter the new 1099 forms by January, Viera said the firm is looking to receive hundreds of telephone calls as tax season leg techinques into high gear There's no question they're the biggest [tax] changes in my own history at our Miami Accounting Service, claimed Viera, who has been a CPA for a lot more than 25 years.
Viera is recommending that Miami Accounting Services develop a communications and outreach strategy ahead of time, not only in their dealings with clients, but also with CPAs, as well for a training program for the staffers who will be fielding the calls.
CPA's who provide their own clients with realized gain/loss information must also take the very important step of synchronizing together with reconciling their calculations with their brokers to make sure that clients receive consistent information.
At the same period, Viera also counsels Miami Accounting Services to look forward to the next two phases with the law and adjust their bookkeeping and communications strategies accordingly. For the 2012 tax year, brokers will be required to report cost-basis data for mutual funds, dividend reinvestment plans and most exchange-traded funds acquired on or after Jan. 1, 2012. The 2012 rules apply just to ETFs that are designated as a regulated investment company, and also RIC.
Other ETFs that are generally designated as corporations will be in the 2011 rules, while still other classes may very well be exempted entirely, though the Treasury Division has broad authority to expand the asset classes covered within the statute.
In 2013, the reporting requirements will expand to incorporate fixed income and possibilities. We're preparing for the worst, he claimed. Maybe this is going to be Y2K - practically nothing happens, and we've done more or less everything preparation. I don’t think that's planning to happen.
Miami Accounting